The phenomenon of the First Crusade was not just a surprise to "Islam". It was a surprise to pretty much every major power in the West and East. Pope Urban II, Byzantine Emperor Alexios I, and various Islamic rulers certainly did not expect the direction, scale, or developments of the crusade.

It's worth going back to the origins of the crusade to explain just how surprising it actually was. In 1071, the Byzantine Empire experienced a crushing defeat against the Seljuk Turks at the Battle of Manzikert. Over the following decades the Byzantines lost much of Anatolia. In response to this threat, in 1095 Alexios I Komnenos sent Byzantine envoys to the Council of Piacenza, calling for aid against the Turkish threat on the eastern frontier of the empire. Alexios almost certainly wished for a contingent of armoured and mounted warriors (Bull, 1993: 17). Similarly Pope Urban II's appeals, including at the Council of Clermont in 1095, were directed principally at mounted and armoured soldiers (Riley-Smith, 1986: 154). It isn't quite right to say he sent "whole ARMIES". This is confirmed from Urban II’s surviving letters, which suggest he actively sought to discourage others from taking crusade vows and that he viewed non-combatants as a hindrance (Lloyd, 1995: 48). The crusade appeal was directed at the warrior classes. Neither Alexios nor Urban expected thousands of others to join the crusade. The "People's Crusade" and "Prince's Crusade", both unhelpfully titled, were led by and included substantial cohorts of mounted warriors (Riley-Smith, 1986: 35). But those who went also included infantry and, more notably, great numbers of non-combatants; peasants, women, children. Instead of a crusade of warriors, it was one which also involved a substantial proportion of non-combatants, to the shock of Alexios and dismay of Urban.

There is, also, extensive historiographical debate over the direction of the crusade; whether Urban intended the crusade to go to Jerusalem or not, whether the intention was to aid the Byzantines or not, and whether it was primarily conceived of as a holy war or pilgrimage. As such, it is debateable whether the crusade was initially intended to "help the byzantine emperor", or to "capture jersusalem"! I won't get into this in any depth, but it's worth noting that the direction, conception, and scope of the crusade were (at least in part) altered over the course of its development (Erdmann was the original proponent of this, refined by Mayer, 1988. Alternative viewpoints are provided by Cowdrey, 1970). My point is that the crusade developed very differently from the military aid Alexios I originally asked for. It went far beyond the expectations of the Pope and the Byzantine Emperor. If Christian powers were surprised by the crusade, it is understandable that "Islam" was taken by surprise as well. There was no plan for the crusade that developed, and no major precedent either. So it is reasonable for Islamic powers to have been "blindsided", though how this manifested itself is complicated.

It's important to clarify one part of your question. "Islam" was not a unitary body, and it's unhelpful to think of Islam in this manner. It implies a unity that simply was not present. In the period in question we're looking at several different Islamic powers, and it's essential to stress just how fragmented Islam was. These include the Seljuk Sultanate of Rum, the Fatimid Caliphate, and the Abbasid Caliphate. These powers did not often have harmonious relations, and political divisions are evident internally, as local warlords often had extensive freedoms to act independently. The geopolitical complexity is demonstrated by this map. We can't assume that they all reacted in the same way. As such, it's better to say that Anatolia conquered by the Seljuk Turks, not "Islam". This is crucial to understand because the crusades were not exactly a holy war of Christianity against Islam, though crusaders conceived of it as such a dualism. To the Seljuks or Fatimids, the crusaders were another player, although a Christian one, in a hugely complex theatre. Hence, the First Crusade did not elicit a united response from Islam.

Reactions to the shock of the crusade thus varied greatly. It is worth noting that immediate Muslim reactions are difficult to gauge, as all major chronicles of the First Crusade from a Muslim perspective are written some time after the events in question. Nonetheless, it is evident that some believed it to be part of a major Byzantine expedition (likely including Kilij Arslan initial reactions to the People's Crusade), while others were preoccupied with local politics and did not respond initially. On the whole, indifference on the behalf of Muslim powers is clear. Chroniclers such as Ibn Al-Athir demonstrate this (5.9-5.10); Ibn Al-Athir is certainly worth a look if you are interested in reading further. Other Muslim sources, such as Ali ibn Tahir al-Sulami's Kitab al- Jihad, and the poet Ibn al-Khayyat, believed the crusade to be just one part of a great Christian offensive characterised by destruction and conquest. Al-Sulami even went as far as to call it a jihad. But it is essential to note that these were written some years after the conquest of Jerusalem, and thus likely do not mirror contemporary views while the crusade was actually happening. The disaster of the People's Crusade while crossing Anatolia contributed to a great underestimation of the scale of the crusade, which Islamic powers failed to appreciate. As such, divisions between Muslim powers predominated, and contributed to the crusaders' success. This is shown, for example, in the atabeg of Mosul's attempt to relieve those besieged at Antioch (see Ibn Al-Athir).

Islamic powers were taken by surprise by the First Crusade, just as the papacy and Byzantines were also. The scale and success of the crusade was utterly unexpected, and without precedent, even considering extensive Christian holy wars against Muslims in Iberia and Sicily. As such, Islamic powers did not react as they might have done had they appreciated just major an expedition the crusade was. Instead many powers continued to be preoccupied by external and internal divisions, which went a long way in allowing the crusaders to achieve success.

If you want to read more on the First Crusade, I would suggest Peter Frankopan [The First Crusade: The Call from the East] as a light read, though it's reaching slightly into popular history. However, it does well at appreciating the importance of eastern dynamics which are often understudied. Christopher Tyerman's God's War is a more scholarly and very enjoyable book [God’s War: A New History of the Crusades]. It's fantastically well written and I would recommend it strongly as an introduction to the subject if you are considering more serious research.

Other sources mentioned:

• Ibn Al-Athir: see aforementioned link.

• Bull, Marcus: Knightly Piety and the Lay Response to the First Crusade, (1993: Oxford, Clarendon Press).

• Riley-Smith, Jonathan: The First Crusade and the Idea of Crusading, (1986: London, Athlone Press).

• Mayer, Hans: The Crusades, trans. John Gillingham, (1988, Oxford, Oxford University Press). Also see Cowdrey, H. E. J.: ‘Pope Urban II’s Preaching of the First Crusade’, History, Vol. 55, No. 184 (1970), for the aforementioned debate on Urban II's aims.

• Lloyd, Simon: ‘The Crusading Movement, 1096-1274’, in The Oxford Illustrated History of the Crusades, ed. Jonathan Riley-Smith (1995: Oxford, Oxford University Press).

Follow-up questions more than welcome.